Hatteras Island Real Estate: Protecting your funds during a real estate transaction
Each year, real estate agents are required to take eight hours of continuing education classes in order to maintain their active broker licenses. The first four hours usually focus on topics that the North Carolina Real Estate Commission considers currently important. The second half of the training offers information on elective subjects. This year, one of the elective courses addressed the proliferation of cons, scams, and hacking that is taking place in the real estate environment. In this article, I would like to share the discussion concerning fraud involving the wire transfer of funds, and other ways that money is sent during real estate transactions.
Close to home, an article on a local news website reported that the Kitty Hawk Police Department recently issued a warning about an online scam occurring on the Outer Banks that is targeting those who are in the process of buying real estate.
The way the scam was described is that you may get an e-mail that appears to be from a business or someone involved in the purchase process asking you to wire money and providing you with specific wiring instructions. The key word here is “appears”.
More specifically, hackers might break into a real estate agent’s e-mail account to obtain information about an upcoming transaction. Once the hacker has all the information they need, they send a bogus e-mail to the buyer pretending to be the agent or the attorney’s office.
The hacker tells the buyer that there has been a change in the closing instructions and that the buyer needs to follow new wire transfer instructions. If the buyer falls for the scam and wires money to the fraudulent account, they may be unlikely to see their money again.
Here are some ways that were suggested in the online article and in the class to minimize your exposure to this scam:
- Never send a wire transfer or any sensitive personal information via e-mail.
- If you are wiring funds, contact the recipient using a verified phone number to confirm that the wiring instructions are accurate.
- If e-mail is the only method available for sending information about a transaction, make sure the e-mail is encrypted.
- Change usernames and passwords on a regular basis, and make sure they are difficult to guess.
- Never open suspicious e-mails (for example, those with misspellings or poor grammar), and never click on any links in the e-mail, open any attachments, or reply to the email.
There are also situations in a real estate transaction when funds might be sent by check versus a wire transfer. In those cases, the advice that was given in our class was to send the check by UPS, FEDEX, or some other mail service that offers tracking. Require a signature by the person to whom the package is addressed to confirm receipt and insure the package for the full amount of the check.
Unfortunately, none of us are immune to the efforts by hackers to take advantage of online opportunities to obtain funds by illegal means. A few days ago, there was a post on Yahoo! Entertainment reporting that Barbara Corcoran, a real estate investor and well-known Shark Tank TV personality, lost almost $400,000 in a phishing scam in which the hacker changed just one letter in a familiar e-mail address on a message approving a payment for a real estate renovation.
Hopefully, the suggestions in this article will create an awareness of potential scams related to the transmission of funds associated with real estate transactions and will help you to become a better-informed consumer.
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Questions and comments may be sent to Tom Hranicka at P.O. Box 280, Avon, NC 27915 or by e-mail to hranicka@hatterasisland.com.
Copyright © 2020 Tom & Louise Hranicka. All rights reserved.
